Chemical supplier has double digit increase

March 5, 2011
| By Pete Daly |
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Haviland Enterprises Inc., a Grand Rapids-based chemical supplier for more than 70 years, began working on a new business model about 10 years ago that has enabled the company to break out of Michigan, doing business now as far away as Brazil and Australia.

Haviland also has more than doubled in size since 2001 and recently surpassed $100 million in sales, which CEO Bernie Haviland acknowledges is a “tiny” amount to companies such as Perrigo or Amway, but “a really wonderful” achievement for a small company like Haviland.

The Grand Rapids-based company, which manufacturers, blends, packages and distributes a wide variety of chemical products, has just experienced two years of strong double-digit growth, adding new employees and investing in new facilities.

Haviland executives credit product and market diversification with its robust sales performance, noting that the company anticipates 15 percent growth in 2011.

During 2010, “we hired at least 30 people and the plan for 2011 is to hire another 25,” said Haviland, whose father founded the company. Haviland Enterprises now has about 220 full-time employees.

When talking about the growth planned for the future, Haviland is careful to note that “it isn’t there until you get it. But that’s the plan, anyway.”

He attributes the company’s expansion into overseas markets partly to “just good luck — but sometimes good luck comes to the people that are working hard.”

Haviland’s new model was premised on diversification “based on accumulated knowledge — the knowledge to use chemicals properly, safely and effectively,” said Haviland. “We looked at the skills possessed by our degreed chemists and other specialists and, in the early part of the decade (starting 2001), began an evolution from distribution to manufacturing.”

“Haviland now blends and distributes thousands of specialty chemicals for consumer and commercial industries — from swimming pools and veterinary clinics to hand sanitizers and construction products,” said Haviland. “We have also developed a deep skill-set in packaging, and our future growth will come from our expertise in manufacturing and packaging.”

Maintenance chemicals for swimming pools and spas are “a very strong growth segment for us … about 50 percent of our revenue,” said Haviland.

Haviland headquarters are at 421 Ann St. NW in Grand Rapids. In 2007, the company bought two parcels nearby, just over the Walker city line in the Avastar Park industrial facilities on Alpine Avenue. Altogether, the company has about 500,000 square feet of manufacturing, warehousing/distribution and office space.

Haviland was a family-owned business that began in 1934 as a small laboratory and chemical supplier. Now managed by the second generation of the Haviland family, the company has grown to become one of the largest privately held chemical companies, currently 76th in the world and 27th in the United States.

Haviland is no longer owned solely by family members; approximately 40 percent of the company is owned by its employees through an employee stock ownership plan.

The business has two divisions: Haviland Products Co. formulates, blends, packages and distributes specialty products for a wide variety of industries, including pharmaceutical, food, automotive, waste water and others. Haviland Consumer Products focuses exclusively on swimming pools and spas. It manufactures, packages and distributes more than 85 products for more than 75 private label customers. That division also manufactures and sells plastic hoses for swimming pool maintenance and other commercial applications.

Haviland serves a wide variety of customers, from Fortune 500 companies with global operations to small regional companies across the United States. Its products also are found in seven countries.

“Once we got our feet on the ground with the new business model, we got ourselves into some fairly dynamic growth — almost a hundred percent of it” outside the state of Michigan, said Haviland. He said it was clear to management back in 2000 that Michigan’s economy was facing an uncertain future.

Haviland said the new momentum carried the company through the recession of the early 2000s and again through the so-called Great Recession of 2008-2009. There were “some issues” during those times, but the company was able to remain “profitable and strong and essentially debt-free.”

Growth highlights include:

**Sales increase of 24 percent, bringing total 2010 sales to $100 million for the fiscal year ended Nov. 30.

**Expansion of international sales to new markets, including Brazil, Australia and New Zealand.

**Addition of 30 new employees in areas including general management, chemistry and production during the last 12 months.

**Addition of new facilities that total 90,000 square feet to accommodate growth.

**Significant expansion of the management team and its roles over the past four years.

**Increased focus on lean manufacturing, which has resulted in cost savings and productivity gains.

**Expansion of “green” chemicals, particularly for use in consumer products.

**Improvements in worker safety, including a reduction of lost-time incidents.

**Expansion of recycling and energy reduction projects.

**Recognition as a Clean Corporate Citizen by the state of Michigan.

From relatively modest sales in 2007, pool chemicals now account for nearly half of the company’s sales and continue to grow, especially on a global basis.

“We private label for a number of American dealers and distributors,” said Haviland. “Companies outside the United States really respect the pool technology we offer. We brand things well, our chemistry is great and our packaging has a great look, so our pool products are attractive at home and overseas.

“Our experience in filling and packaging in the pool business has given us a strong advantage for packaging worldwide. Whether a client wants anything from a pint to a rail car, Haviland can get it to them labeled, boxed and shipped anywhere, worldwide, on a very competitive basis.”

Haviland said the halt of new home construction has impacted the construction of new swimming pools, and the recession definitely made a dent in the addition of above-ground pools. But he also noted that pool owners know that failure to use the recommended maintenance chemicals can soon lead to conditions that are far more expensive to fix than the cost of routine maintenance.

He also has a theory that, during the recent severe recession, many people who “had pools used them. They stayed home; their backyards became part of the vacation plan, to a certain extent.”

The pool and spa chemical industry “is somewhat resistant to major economic boom and bust,” he said. In a recession, it may remain flat but “doesn’t really go down.”

Adopting lean production processes allowed Haviland to reduce expenses, which also helped during the recession. An internal mantra of reduce-reuse-recycle has spurred cost-saving changes throughout the organization.

Haviland Enterprises began its employee stock ownership plan when it began changing its business model about 10 years ago.

ESOP is “a program designed to induce loyalty and long-term commitment,” said Haviland. It takes five years for Haviland employees to become fully vested in the ESOP program, in which they are given shares of stock “like a retirement benefit,” he said.

“It makes a huge difference. Everyone who’s been here is an owner,” he said, adding that “we don’t see half the shenanigans we were seeing 10 years ago.”

But an ESOP program takes “a lot of education, a lot of time for people to understand not only the benefits but the responsibilities. It’s been an important element in our success,” he said.

The company has reported that its ESOP dividends increased by 147 percent over the past six years, and the share price of Haviland stock increased 61 percent during that time.

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